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Jupiter UK Special Situations manager Ben Whitmore is sticking with his underweight to basic materials and other areas exposed to slowing growth in China. Instead, he favours stocks more reliant on Western demand, which he continues to believe is underappreciated by the market.

As a long-term investor with a contrarian deep-value approach, Citywire A-rated Whitmore has been underweight globally orientated companies for some time, believing that investors are paying too much to access what he sees as a sharply slowing Chinese growth story. This has meant long-term underweights to sectors such as luxury goods, Asian banks, many industrials and miners in the fund, which features in Citywire Selection.

Is the gloom overcooked?

He thinks the gloom surrounding many Western-orientated companies has been overdone in many cases, leaving a number of solid enterprises with steady earnings streams sold down to levels below their historical averages.

This view has led Whitmore to maintain overweights to media, aerospace,pharmaceuticals and food manufacturers, and in May he also increased his weighting to financials, including RBS(RBS.L), after the sell-off. The position in RBS was started in January to take advantage of the boost to markets from the European Central Bank offering cheap loans to banks.

The fund lost around half of the index's 7.2% decline in May, with Whitmore's underweight to basic materials and oil companies helping to stem the losses.

Whitmore's defensive picks

His stocks in relatively defensive sectors such as software, pharma, support services, food and telecoms were all positive contributors in the month, and key holdings such as software firm Logica(LOG.L), largest holding GlaxoSmithKline(GSK.L) and fellow top 10 holding packaging provider Bunzl(BNZL.L) all added value.

Among his financials holdings, RBS and inter-dealer broker Tullett Prebon (TLPR.L) delivered weak performance, but Whitmore took the opportunity to top up on the sector, adding to his stakes in Schroders(SDR.L), Tullet Prebon and RBS.

Whitmore also initaited a new position in private equity specialist 3i Group(III.L) during May, and is currently sitting on around 4% cash.

'We hold media, pharmaceuticals, industrials, financials and software companies whose valuations look attractive compared to their average earnings over a 10-year period. The companies we hold have strong market positions, healthy balance sheets and solid returns, and yet their valuations show that they are unloved by the market. We remain confident that our contrarian, value-focused approach is capable of generating superior returns over the long term,' Whitmore said.

That approach has led to long-term rewards for investors. Over five years to 29 June, the fund has returned 20.5% compared with the FTSE All Share's 1.9%.

Citywire Selection verdict:

Avoiding basic material and commodity related stocks, because of what he thought were stretched valuations, has rewarded Ben Whitmore. He is sticking to quality blue-chip companies, but is finding some deep value in a handful of domestic-facing firms including media stock Daily Mail Group and retailer Home Retail Group. Outperformance across market cycles has been delivered with lower volatility than the index.